Just started Chapter 8. It feels like a Megaten game now. This game has to connect with the first, I'm thinking. Will see as I finish up the next two chapters.
I haven't touched many side-quests because the story is so good.
Also, the party member AI during the Chapter 7 bosses made me rage a little.
I still think the story is a perfect measured mixture of Xenogears' and Xenoblade's. The character backstories remind me quite a bit of the character backstories of Xenogears, but the lore/theme, character personalities, and pacing are much more Xenoblade-esque.
I think it is probably the best Xeno-game yet, for me.